d. ULTIPLE CHOICE THEORIES 1, Which of the followit i x following statements Is not Correct with regard to foreign currency hedges? They are executory contracts They can only be used by large companies They manage foreign exchange fluctuation risk They establish a fixed exchange rate between cumencies 2. A foreign currency forword contract has which of the following features? a. b. c. @ The exchange of the curency moy or may not occur The parties fo the contract do.not know the number of cumency units that will be exchanged until the date the forward contract matures The pariies to the contract must record journal entries at the date the forward tract is established v i i exchange the currency regordiess of the e parties to the contract must: range rate on the date the forward contract matures26 u 1. wich of na ewig sone) core wh 20011 ON CAEN ewe COMME const etewen on cic De OG © RS Smear ie ecconge ne camer Hon ae ee, rte of corer is $e Saoct con bon Ih Sicge canton lace oF HME cto avant en cnr 20 ore vd The fowar ote omors Hohe Ihe heater away to he same Me et rr (shar c'be Nghe hey Con Be he some |. nicn of he totpwing soloment rect wah regard 19 counting fo 0 fren Sarco aaa anasto Ge eet TC oe gen he we othe accousecehate ome ‘Sores denned ena chorgn nfs ened xconae Se eRe Selanang te ro occouerecehobl she vr rego of wether IMS Seeger Feces ne reve wih o foward COMPO! et 2. Sonpeinte tattoue ot ne omar contoci re on recognised ot he ‘Sie seco vocowabie a cotectod (“ihenay se sn eat and on accompanying lve ciency orwae cOnvot "SM accouring fs change n he vue ef he sccounl receNvent he CSSEe Rect ic in teg on he cance between fhe spo! oe teroig curene forward conct ihe Snoncel carr a ce he canton! b cwaied «Wife recency tani ne occu receole becoe MO «2. Ehongrin ne tar save te foward conkot ee bored on ne chonae pe tbotoe 1 Or wl tm pt hee a oon canecy commie ono aca ‘wonsaction applicable? = 2 fan Sof econ ut ede of tert S Ran essousie Quan urna ase Fonte age confine vt tu fesoten dle & ASURS ams SS comm stg meee nt Sle | Rich of te fotewing tno & potent recoonih e Conmimen! e255 gation ote when @feeign vere pes Haig eran Main Fog panes Ea wicnotinefotovrg Sotamennsconc wh mga stain corncy comment iiged tno omer conc che ler camer nage oa ar on ote me ot 1p negancrimente loncaercyconminers towns corto sta Soe ten perch toe omar ce meee ot (norge ot ond na oro 4. Tipe cnn cat conten ce me vwschlne iowa ena elwmigassfoncoes ee TY romeo amogerent may sole 2 hedge wih regrd10 forested foretan ‘Satan reso whosregn ty Oec ce Senopece ate peer agen bed on ecates eI MEY a) 2 stowseetoninqreynonetonont oem rons wren es ine crn vee o oheage nhement fro frecanted lion ameney Pores ate pred re ana A sees ran fe owen norte aren aro re re es Pde nearer eo lrocastes ton caenct PE 2B ie Sec ne ncome ovement rien of he olowngsotement ot cane win regard to forcaned oie tertin feagea win 3 ore crm 2 roy woman redo tyra encrorge ries iy econ | era cal ot ne ine oases eons, 2 eee er commemert rr ot eo RITMeS,conact mut be ved ot me parce see! dle ic tne alow eoners nc conctvhegs oreecAtre SOR OAAY 6. 0 speculative contact It neha SE ano gale of lot Hom eel Seren co be ceed wih foward contacts on b. Skbltnre Gomoch con be ceotes enres rele win 0 fw enna! dow a ad & : rea eave contoIne owing cen wtuece: a owt IRS 28 te, 1A Fen comer rroctos nl mani 3 redae BOK! OW OMNI eg & Sme'Rue te evawocten mena [towed Dy he Fay 1. wnt ovng dont arte on ics “Srey tonscing Sa wit rag Tons Sororoiea Mise careey. sed ot 2 Are cote Irmaonmentspochaw erty tbe pal align Curty raconealosigr eorery sorscton win Sgn aban ocearey ‘commie ts puchow reertay aerompotes nook "on As 10 mooie comgny ere noo nw contac. which apes Sy tion ceri 25st 9 Don aaa ar eae on Bact Erarae ne vo ote loners cove wl be esr i net Conarerive ‘nega ne alee whom tang Sais? he Pbne conony ii merchant 2 comer no elon coy or nugat ond eas pyar ol FE | 005500 on Decor © _Ihefitooie comoory ps it macros toa coer krign {Sint On Rug pment oF 50050 expec cn Bere Ihe Patocne comaany peso puchose marcharcie tm 2 worse {lan Coury. wth poyment of 1200008 expected 1 be bo & Secor ' xcnonge on ond one on ona xchange corto! hot cove he some re Detoa oe roman wh ey "SSSR Gn room « heap torah be recognises ot Borel he atghal sos roracto, treo om Sonu soerane ‘came om CoM Coane a ny ¥ mot ange . Jaee'semeories the account of eve née belore conscsating 95 orion curency weotens ago the evo, Joba's wi show [atiolee Baar on ooacre 4. Taneiitgrcinercyenpecea to srongen aga! he es Jbees Embed eGo es heaping oh nvesimens nonce unctonat cnency of loess oan a cot cmency, Wich of he Ble Se onee's nraaton gore ond onest ‘hows i coon in ha scien ea _etnedge accountng bot he reas ivastnent end the frecoee eet not ue nedge accountng fer ether Ine hedge Invest he ‘eedied wonton? 1. A Mpina company hedges an antpotes puchave of merchandie rom 2 ‘pote caer ebm Mase m pores. The hedge quis ore com Row hea ected wamacton "When ke gar cra west ake mene gars tne hedge twenment pated "Sin he Sapo ttt deer of he merctancia lorie marchers.gamers, 3 SSersel 8 es, era ee ne TL Maus nee roan win ohecg nuen 0 hedge Beis te ince Satna en nas eet > RESEe eee a eehteenr cen SSS eee ne See recees teow anemone a Se iiaeee 1, che lt NO amet ocean noon ectonge ast S)Reermmgot coer the tn em 1. weno a ahi stamens cee ns ioeoes he So ou flan cuencynPiteine ges ‘hoe Selec Se cnt tlgncavencyoprenenra ome Stace see eeres a ov on nares cuca ‘es he cov oui! ri cure mn Piece ems oY Farefasiain sie eat ha ven cencr opener oe ‘Spare sear etanes io a ore! con Inbrtbes te cia onto agncuency nin Plone psc inca rh ena ran coer Poem me a. Mains econo tannery min Pee pix ton Terashima tno rg caeney oh pcan oe [Wogne peo rlores oot an marec avon, 44. Tehatgcv atlon chon sgn nen gnetieton tok ake hed rata lg rn Mag = te na mine ren Bother hay =o ie (2. Fron cer go on mon an towne ee st ‘i sated Sry i = imore a om ™ iil pees m ee On oer econie o one comerenantve su me tomorsecnn sri. he par ne itor BOHENCOMEY poy, TRI eotad ome comsatanie one on cota 12 Se" fears meen « Soilamenemovesan Sennen 41, elon core oon ne on co owas oad wot 2 ome eee Penetrations 2. ePaper ot nine 2" toe : Ea er Se Romocon on eho tan ty con Me Rites one necge tom satay Soo som 4. mien he tong on la 0 tt zoe alegre ot. % Roneotne ae Beare nesen & Unsonontod nee (2. Pe (orign cura wach or soe 8h : Raere oe 5. wc tn tong rt oe ne ot aca legos! et Se chong ne re 1 "esac 2 ie ecient tga, © Ma clogs ine nwo eae te. epandng owner Paoietonod > belgsea ner 5 Rapes te tege cantons 5 setora ming tn carr ncehoe aig Honan oa Facto, Movers coo 2 Con tow pegs ps000 gon Feats 8 Pao gan & Frooo tess 2 sate oe natn nt ang na separ cornr a ka cerg a ie eet fe Sob emaeuacenenentacte nat sal oact on ara nese Sasa Rona Boece ‘vate of the foreign cumencies? Ee areca: ‘2. No impact on nel income, © F380 decroose inet come, § F000 decrease mn net ncome. d Pi9aiZincrecse nnelincome. ‘tems 31 trough 40 are based on the towing intonation: (On October 2.2037 Ast Tamay, Inc dered a custonbul passenger van froma Japenese firs the purchase ardersnoncanceldae, Te purchase pce 161,000.00 yore wih davary and payment oboe on wos 3, 20x, On Ocicber 2.201, Asser Tamayo, ne. enveredin'oatorwers contact ¥ buy V 00.00 ers ‘on Motch 31,208 forP87.On Morch 8, 2058, the cuslom-bul! pawenger von Sudsinaed lenm maine spine roe pee) rns ST Sacha pope 8 °S 'S Account tot ok Vl Hage St. The December 31.7017 prot ond lass statement, net foreign exchange ‘Gain ot os forward contract and commitment: ‘©. PIODE0 net goin ete B. "10000 net oss 3. Not oppliable shee hedge ‘eccouning doesnot onaccaunt blonce a: own ne Decembey 3 5. Ihe em Commimant account Bortaonce eet one 7a eh raat 8 "ae cot the Book ave olingen Companysnel cual ndoyisursurewhetne he dec exchange Tale for nchon pees wiinereaseoGacteose lor ine year ond wishes Yonedge isnot cue! rvesiment. On Jowary 1,200, days 100% owner share ol | Indian Company’ net set's equal io $0.000000 pees (40.500 900 peeroo na mamangenmemneer cP 2700.9 ae Steal eee reso ae Nace Se seseneocuneasgecn aay ecu Rommel okt er Fare aecounl Nod & cTec Balonce: ‘he lovant ect spo! exchonges Peso /RUPSS) oe ote ote Ja 20 on Pio Setone 200 138 Bocenbel 3 257 e148 Biv overge 13 105, heDecenbe3}2x leonspayebie ozcountbolonce oblainedtohedge Ino nel vesment amounted 1: ‘3 pSomno0 rsg00000 ©. "ésoma00 &. "raconcoo 106, he scene. 207th fron ncnone gael ve toned ot 2, Proc00m fxs-OC! —e,_-PIOGNNON0 gain-oci ©. “TaanoQ00 lor Oc! &.- "10000000 Bain -eomings 107, te December 31,200: lerestEpense _nlrest Payable, 2. Fasoow 3san000 8 ‘32000 ‘3sq0000 < 32:00 20000 4 ° ° 8. the December 31, 2087 ye gainer i ea eran exchange goin ores raceablefohedoe a PO ,P250000 loss-curent earrings 250000 goin-curent "280.000 loss OCT ‘comings - The December 31,2097 tandaton reserve balance | colarena eeu (cumuative ronsation 2. 1.950000 credi balance <. P950000 crecit bolonce b. 1980000 debitbalonce 4. "950000 debit baonce ine Hag orn Mag ms tts 10 trough 12 or bose on the oowing dom flon: wor orate cer on Zegaet esate nara Sorcisovan saunas name tan naeamnn se gee siiechoSagtaetnantaiimeiean arcane Selected exchange res between ne Knconalcurency (oot and ne Sess re satohows. ote Jenwory 200. Gatebart 206, : Becomoe 31258. Ug Bibaverage 1 110. TheDecember 31.208 Loanspoycble sccount balance oainedohedae Ihe et iesiment omooniea 10 = Praua00000 ’3. "wipeco0 8 "rooooaano . "noooase 111, Te Dacember 31, 28 the fereign exchange gain oross due toh inet wesiment 5400000 goin 01 "2. FeO lox-OCh 5 "S400 los-eemings — &. "14000000 fos OC 112, the December 31. 20s, ranstioneserve balance (cursive rardation 8. “teonto Geotboonce — None: choline og rant nore wih mga olan tency Meco 8) Mey con oar be ted by oe comport: ‘S, fhey oko asa achane oe between corences 2. Atowlgn coer wad contact hoy tin le eng chest Resto canes cotentone | BER SS Si aR em ce nee Bee eeiee waeomesecesren om ° Serene ; We Snare Pestae nal now ho pune of cumency es ot